LAHORE: Distributors and whole-sellers are facing problems in implementation of CNIC/NTN requirement by the Federal Board of Revenue (FBR) as the size of transactions of 75% to 80% of unregistered distributors and whole-sellers are less than Rs 100,000.
The CNIC/NTN requirement was introduced through Finance Act 2019 under section 23(1)(b) of the Sales Tax Act whereby every registered person was bound to include CNIC/NTN of unregistered recipients of supplies excluding supplies made by retailers to an ordinary consumer where transaction size does not exceed Rs50,000 (revised to Rs100,000). CNIC/NTN of all unregistered recipients of supplies along with the value of supplies is required to be disclosed in the monthly sales tax returns of registered suppliers.
While requesting anonymity in order to avoid FBR’s wrath, they further pointed out that the recipients of these supplies are paying sales tax through electricity bills; therefore, data of these unregistered recipients are available with FBR for proper monitoring and analysis.
According to the market sources, both distributors and whole-sellers are encountering significant resistance from retailers for supplies on CNIC. The CNIC/NTN requirement had become an obstacle in the ease of doing business for distributors and whole-sellers. Presently, they said, there is a huge turnover of distributors to whom supplies are made by manufacturers. They are either winding up their businesses due to their incapacity to maintain a huge record under income and sales tax act including CNIC requirement, huge cost and higher minimum income-tax @ 0.25% of turnover or preferring not to register their entity under Sales Tax Act. There is a need to rationalize the CNIC/NTN requirements in light of the impediments discussed above.
Although the implementation of the CNIC/NTN requirement was deferred till 31 January 2020 through a written agreement reached between Chairman FBR and Traders Representatives on 30 October 2019, yet its enforcement was made in October 2019 by disallowing related input of unregistered recipient of supplies where CNIC/ NTN was not disclosed in sales tax returns for the month of October 2019 and onward. Since proper enactment against the aforementioned agreement has not been made to date, relevant inland offices are unable to provide relief based on such agreement. The FBR should issue immediate instructions to inland offices to provide the desired relief in order to honor its commitment and meanwhile make necessary amendments through Finance Act 2021.
Copyright Business Recorder, 2021
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